Japan Petroleum Exploration Co. (1662), the nation’s second-biggest oil explorer, plans to more than quadruple output at its Canadian oil sands project as it seeks to cater to growing U.S. demand for the fuel.
Capacity at Hangingstone, in northeastern Alberta, will rise to 30,000 barrels of heavy crude oil, known as bitumen, a day, from about 6,000 to 7,000 barrels now, according to a statement today from the Tokyo-based company. The expanded area will be developed in two stages, cost C$1.4 billion ($1.4 billion) and begin pumping oil from 2016, the company said.
The project, in which Nexen Inc. (NXY) owns 25 percent and Japan Petroleum the rest, applied in 2010 for regulatory approval to expand capacity. China’s Cnooc Ltd. (883) this month won permission to buy Calgary-based Nexen for $15.1 billion, making it the biggest Chinese takeover in Canada.
Japex, as Japan Petroleum is also known, is targeting U.S. refineries as the main buyers of bitumen from the project as it seeks to build on experience of pumping oil from non-traditional sources. Japex will consider developing other oil sand leases and wants this segment of the oil market to be one of its main areas of focus, the statement said.
Steam is used to extract crude oil from tar-like sands at Hangingstone.
Japex plans to finance its C1.1 billion part of the investment with its own funds and bank loans. Nexen will take a final decision on the investment in the first three months of 2013, the statement said.
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